November 17, 2002 Weekend Issue
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THREE IN A ROW! Scottrade is proud to announce its THIRD CONSECUTIVE ranking as Highest in Investor Satisfaction with Online Trading Services by J.D. Power and Associates! Thank you, customers! Scottrade: Member SIPC.
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Read this report online in full color with graphs at
http://www.investmenthouse.com/weekend/111702.htm
1) MARKET SUMMARY
No major moves to close the week, but stocks overcome some trying news.
– Stocks shake off several negatives to close mostly higher.
– Same old story in the manufacturing sector as prices show some punch.
– The week’s close did not look impressive, but stocks overcome some lousy news to do it.
– Leaders continue to perform all week, running ahead of the market. Hence the name.
http://www.investmenthouse.com/1weekendmarketsummary.htm “> Click here or on link for our full Weekend Market Summary
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2) Stock Splits
Playing stock splits can be very profitable, but it takes know-how.
Our stock split service focuses on three main types of plays:
1) pre-announcement (where we forecast an upcoming split prior to the company making the announcement); 2) pre-split (these plays are made in the days leading up to the actual split day); and 3) post-split plays (plays made after the actual stock split where the stock is showing continued or renewed strength).
For post-splits, we can play them as we would pre-splits (very short term), but we prefer to stretch our horizons, playing the trend. When playing options, we look further out, 2 or more months at least. We let the trend carry us along if there is one, but we will also take profits if the technical pattern degenerates, e.g., breaks a trendline. The main difference between post-splits and pre-splits plays is that we really have to like the pattern. Pre-splits can run right before their splits even with poor technical indicators. For post-splits, we are looking at the stocks from more of a longer term “would I buy this stock at this juncture?” position. Now there are times when a hot stock splits and investors pile in to get in while the stock is ‘cheaper.’ We play those, but with more of a short-term, pre-splits mentality in that we will be ready to get out fast if the momentum fades.
Remember, everything we do has to pass muster with the market that day … don’t fight the market on these plays. Here’s a post-split play to watch and our current analysis.
EXPD (Expeditors Intl.–$32.20; +0.83; optionable): Air delivery
STATUS: Cup w/handle. Blasted off Friday on some huge volume, rallying to 33 on the high but then giving back 80 cents to the close. It held over the October high on the close, a good sign of support. This still puts it well within striking range on the breakout move, and new buys can be taken on a further move up. Excellent accumulation.
Volume: 1.216M Avg Volume: 544.909K
BUY POINT: New positions: 32.35 (orig. $32.08) Volume=750K Target=$38 Stop=$29.83
POSITION: URP BF – Feb. $30c (62 delta) or URP EF – May $30c (62 delta, low OI) and/or Stock.
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Learn more about our Stock Split Report – Forbes.com Best of the Web Online Edition says: “. . . seek out the Stock Split Report . . .”
http://www.investmenthouse.com/1stocksplits1.htm
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3) Technical Play
VSEA (Varian Semiconductor–$27.31; -0.25; optionable): Chip equipment
STATUS: Reverse head and shoulders. VSEA is still deep in its correction, but has formed a reverse head and shoulders, coming off the 18 day MVA to complete the right shoulder. Now it needs a breakout from the pattern to take it up to the 200 day MVA. Price/volume action is very good moving up off the bottom of the pattern, and money flow is is already racing ahead of the move. This is a trade at first as we look for a move up to the 200 day MVA (32.44).
Volume: 916.212K Avg Volume: 1.046M
BUY POINT: $28.03 Volume=1.4M Target=$33 Stop=$25.96
POSITION: UES BE – Feb. $25c (66 delta, low OI) and/or Stock.
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Learn more about our Technical Trader Report!
http://www.investmenthouse.com/1tech1.htm
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4) Covered Call Play
PGN – Progress Energy Inc. is currently trading at $40.8. The December $40 Calls (PGNLH) are trading at $3.00. That provides a return of about 6% if PGN is above $40 on expiration Friday in December.
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Learn more about our Covered Calls Service!
http://www.investmenthouse.com/1coveredcalls1.htm
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5) IPOs
Merrill Lynch (MER.N) and Morgan Stanley (MWD.N) earned bad press and downsized pay cheques when client China Telecom slashed its share sale, but the Wall Street firms need not worry China will freeze them out of future deals.
“The fact is these China deals are very difficult,” said Stephen Brown, head of research at Kim Eng Securities in Hong Kong. “There are four or five players in the world who are prepared to run around and chase after them, and you can’t keep striking everybody off the list.”
This IPO column is continued at:
http://www.investmenthouse.com/1ipo.htm
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Scottrade: Ranked Highest in Customer Satisfaction 3 times! Apply now!
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Bookstore FIRESALE!
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The foregoing is commentary for informational purposes only. All statements and expressions are the opinions of Online Investment Services, LP., or Split Ventures, Ltd. This information is not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on the related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolios of writers for this issue may, in some instances, include securities mentioned herein and on the related web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors. No one associated herewith receives compensation in any manner from any of the companies that are discussed in this newsletter or on the related websites.
Copyright 1997 – 2002 by Online Investment Services, LP. – All Rights Reserved.
